Steel Mills
ArcelorMittal Backs Out of Ilva Purchase
Written by Sandy Williams
November 5, 2019
ArcelorMittal is withdrawing from a deal to acquire the troubled Italian steel plant Ilva after the government removed legal protection for the company while it brings the mill up to environmental standards. On Monday, AM InvestCo Italy sent a notice to Ilva’s commissioners that it will withdraw from or terminate the agreement.
Ruling political party 5-Star Movement said it was unfair to shield the steel plant from criminal charges alleged by residents who have suffered health problems from the heavily polluting steel mill.
ArcelorMittal Italy CEO Lucia Morselli criticized the decision in a letter to staff. “It is not possible to manage the plant without this protection, and it is not possible to expose employees and contractors to potential criminal charges,” said Morselli.
ArcelorMittal has been leasing the plant, with an option to buy, since November 2018. The company promised to invest $2.7 billion into the facility with about half of that investment directed toward controlling emissions and other pollutants by 2024. ArcelorMittal began the acquisition process with the submission of a non-binding bid in November 2014. The acquisition met with numerous stumbling blocks over the following years. In 2018, ArcelorMittal agreed to divest several of its European assets to alleviate the European Commission’s antitrust concerns.
In addition, the criminal court of Taranto issued decisions requiring that certain corrective measures at the plant be completed by Dec. 13 or blast furnace No. 2 would be shut down. ArcelorMittal said it was impossible to meet the prescriptive measures by the deadline.
“Such prescriptions should also reasonably and prudentially be applied to the other two blast furnaces at the Taranto plant,” wrote ArcelorMittal in a press release. “The shutdown would make it impossible for the company to implement its industrial plan, operate the Taranto plant and, generally, perform the agreement.”
ArcelorMittal requests that the government take back responsibility for Ilva Steel within 30 days of AM’s notice of withdrawal and termination of the agreement.
A government source told Reuters that the Italian government will not consent to closing Ilva and will summon company officials to Rome.
Industry Minister Stefano Patuanelli accused ArcelorMittal of using the removal of the legal shield as an alibi to pull out of the contract because the mill is losing about $2.2 million per day.
The leader of the center-left Democratic Party (PD) says the immunity should be restored for ArcelorMittal. “Anyone who pollutes should pay, but a group implementing an environmental plan should not have penal liability for previous actions for which it had no responsibility. We will propose parliamentary measures in this sense,” said PD party leader Nicola Zingaretti.
Sandy Williams
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